THE  LAW 


OF 


ORESME,  COPERNICUS,  AND  GRESHAM 


THE  LAW 


OF 


ORESME,  COPERNICUS,  AND  GRESHAM 

A  PAPER   READ   BEFORE 

THE   AMERICAN   PHILOSOPHICAL   SOCIETY 

April   23,    1908 


BY 


THOMAS  WILLING  BALCH 

Member  of  the  Philadelphia  Bar 

The  American  Philosophical  Society 

The  Council  of  the  Historical  Society  of  Pennsylvania 


Reprinted  from  the  Proceedings  of  The  American  Philosophical  Society 
Volume  XLVII,  1908 


PHILADELPHIA 

ALLEN,   LANE   AND  SCOTT 

1908 


OF   1 


UNIVERSITY 

OF 


¥ 


,V 


y 


NOTE 


In  preparing  this  paper  I  have  consulted  the 
original  manuscripts  of  Oresme  and  Copernicus 
edited  by  Wolowski  and  published  by  Guillau- 
min  in  1864,  and  also  Burgon's  life  of  Sir  Thomas 
Gresham  printed  in  1839. 

T.  W.  B. 

Philadelphia,  May,  1908. 


173079 


THE  LAW 


op 


ORESME,  COPERNICUS,  AND  GRESHAM. 


By  Thomas  Willing  Balch. 


Among  the  most  certain  laws  known  to  economic 
science  is  the  one  that,  when  two  moneys  of 
unequal  value  are  placed  in  circulation  at  the 
same  time  side  by  side  as  currency  of  the  realm, 
the  poorer  or  cheaper  will  drive  the  better  or 
dearer  from  circulation.  This  law,  though  fought 
over  most  strenuously  in  this  country  within 
recent  years,  as  if  its  immutable  operation  had 
not  been  thoroughly  demonstrated  in  past  ages 
of  humanity,  was  known  in  part  at  least  to  the 
Ancients.  Of  this  there  is  ample  proof  in  the 
Frogs  of  Aristophanes.  In  that  play,  the  fore- 
most comic  poet  dramatist  of  Greece  places  in 
the  mouths  of  the  chorus  these  lines: — 

"Oftentimes  have  we  reflected  on  a  similar  abuse 
In  the  choice  of  men  for  office,  and  of  coins  for  common  use; 
For  your  old  and  standard  pieces,  valued  and  approved  and  tried 
Here  among  the  Grecian  nations,  and  in  all  the  world  beside, 
Recognized  in  every  realm  for  trusty  stamp  and  pure  assay, 


2  THE    LAW    OP 

Are  rejected  and  abandoned  for  the  trash  of  yesterday; 
For  vile,  adulterate  issue,  drossy,  counterfeit  and  base, 
Which  the  traffic  of  the  city  passes  current  in  their  place."1 

In  the  above  quotation  it  is  distinctly  shown 
that  the  better  coins  that  had  been  current  were 
driven  out  and  replaced  by  pieces  of  inferior 
value.  And  as  a  poetic  mind  like  that  of  Aristo- 
phanes could  hardly  have  understood,  much  less 
have  discovered  such  a  subtle  unwritten  law  of 
money,  had  not  some  knowledge  of  it  been  the 
common  possession  of  the  intellectuals  of  Greece 
in  the  epoch  in  which  he  lived,  we  can  infer  from 
Aristophanes 's  statement  of  it,  that  the  Grecian 
States  passed  through  the  ups  and  downs  of  a 
change  in  the  standard  of  value  caused  by  a 
debasement    of    the    currency. 

The  same  state  of  affairs  existed  among  the 
Romans,  and  the  amount  of  benefits  and  evils 
that  obtained  in  the  reign  of  each  Roman 
Emperor  can  in  a  measure  be  judged  by  the 
greater  or  less  purity  of  the  coinage  issued  in 
their  respective  reigns. 

1  Frere's  translation. 

In  Bonn's  Classical  Library  this  passage  is  thus  rendered:  "The 
freedom  of  the  city  has  often  appeared  to  us  to  be  similarly  circum- 
stanced with  regard  to  the  good  and  honorable  citizens  as  to  the  old 
coin  and  the  new  gold.  For  neither  do  we  employ  these  at  all,  which 
are  not  adulterated,  but  the  most  excellent,  as  it  appears,  of  all 
coins,  and  alone  correctly  struck  and  proved  by  ringing  everywhere, 
both  among  the  Greeks  and  the  barbarians,  but  this  vile  copper 
coin,  struck  but  yesterday  and  latterly  with  the  vilest  stamp." 


ORESME,    COPERNICUS,    AND    GRESHAM.  3 

The  experiences  of  the  Ancient  World  with 
money  as  the  mechanism  of  exchange  were 
largely  unknown  to  the  peoples  of  the  Middle 
Ages,  and  they  had  to  discover  for  themselves 
at  a  great  and  bitter  cost  that  any  attempt  to 
debase  the  currency  only  results  in  the  good 
money  disappearing  from  circulation  to  the  ruin 
of  the  commonwealth  and  of  its  inhabitants, 
especially  of  the  poorer  members. 

Three  men,  exercising  three  different  callings, 
but  all  three  profound  students,  and  two  of 
them  ranking  among  the  scholars  of  the  world,  in 
three  different,  countries,  in  three  distinct  periods 
of  time,  discovered  independently  of  one  another 
and  explained  to  their  respective  sovereigns  that 
when  into  the  currency  of  a  country  a  poorer 
or  cheaper  money  is  injected  by  the  side  of  a 
better  which  is  the  standard  of  value,  the  certain 
and  immutable  result  will  be  that  the  currency 
of  the  realm  will  be  debased  to  the  standard  of 
the  poorer  money.  For  as  it  will  then  be  pos- 
sible to  pay  debts  in  either  money,  people  will 
naturally  pay  them  in  the  cheaper  currency, 
selling  the  better  money  by  weight  at  the  pre- 
mium that  it  will  command  in  the  standard  of 
the  poorer  currency. 

These  three  men  were  Nicole  Oresme,  Bishop  of 
Lisieux  in  Normandy,  who  stated  this  subtle  un- 
written law  of  money  for  Charles  the  Fifth  of  France, 


4  THE    LAW    OP 

surnamed  the  Wise;  Nicolaus  Copernicus  of  Thorn 
in  Prussia,  the  discoverer  of  the  Copernican  theory 
of  Astronomy,  who  expounded  this  same  law  of 
the  currency  for  Sigismund  the  First  of  Poland; 
x  and  Sir  Thomas  Gresham,  a  noted  English  merchant, 
who  explained  it  to  Elizabeth  of  England.  It  is 
proper  then  that  in  honor  of  these  three  discoverers 
of  an  economic  truth  that  is  a  precious  thing  for 
humanity  to  know,  that  this  law  should  be  called 
the  Law  of  Oresme,  Copernicus  and  Gresham. 

Oresme  and  Copernicus  each  prepared  a  learned 
and  comprehensive  treatise  for  their  respective 
sovereigns  on  the  practical  functions  and  workings 
of  money,  and  Gresham  wrote  a  letter  to  his  Queen 
in  which  he  pointed  out  to  her  that  good  and  bad 
coin  could  not  circulate  together.  No  branch  of 
science  arises  all  developed  at  one  bound  from  the 
brain  of  a  single  man  as  Minerva  sprang  all  armed 
from  the  head  of  Jove.  It  advances  by  successive 
degrees,  as  one  scholar  after  another,  armed  with 
the  knowledge  acquired  by  his  predecessors,  devel- 
ops further  what  the  human  race  knows  of  the 
laws  of  the  universe.  And  as  Hugo  Grotius,  who 
assembled  from  all  points  of  the  compass  the  rules 
and  usages  that  Princes  and  cities  observed  in  his 
day  in  their  relations  one  with  another  in  his  monu- 
mental work,  De  Jure  Belli  ac  Pacts,  and  gave 
them  a  further  advance  in  the  trend  of  a  humane 
and  civilized  development,  has  justly  been  called 


ORESME,  COPERNICUS,  AND  GRESHAM.       5 

ever  since  the  father  of  the  science  of  International 
Law,  so  Nicole  Oresme  and,  a  greater  man  than  he, 
Nicolaus  Copernicus,  for  their  pioneer  work  in  the 
exposition  of  the  true  rules  that  govern  money  as 
the  medium  of  commercial  exchange,  have  just  as 
truly  been  described  by  MacLeod  as  the  Castor  and 
Pollux  of  Monetary  Science.  They  both  delved 
into  the  past  experiences  in  the  matter  of  money 
of  their  respective  countries,  and  probably  made 
use  of  much  of  what  the  Greek  and  the  Roman 
publicists  had  said  on  the  subject.  The  work  of 
Grotius  first  redounded  to  the  advantage  of  humanity 
by  the  application  of  many  of  the  humane  principles 
that  he  advocated  by  their  practical  adoption  by 
Gustavus  Adolphus  of  Sweden  in  the  terrible  Thirty 
Years  War.  The  light  shed  by  Oresme  and  Coper- 
nicus on  the  functions  of  currency  first  helped  to 
lighten  the  burdens  of  humanity  through  their 
application  by  Charles  the  Fifth  of  France  and 
Sigismund  the  First  of  Poland.  And  a  generation 
after  the  true  expounder  of  our  solar  and  planetary 
system  had  prepared  his  treatise  on  money,  Sir 
Thomas  Gresham  likewise,  through  Elizabeth  of 
England,  aided  the  human  race  to  derive  the  advant- 
ages that  are  conferred  upon  society  by  an  honestly 
maintained  measure  of  value. 

The  importance  of  the  economic  work  of  Nicole 
Oresme  was  first  revealed  to  the  world  at  large  in 
1862   by   William   Roscher,    Professor   of   Political 


6  THE    LAW    OF 

Economy  in  the  University  of  Leipzig.  Oresme's 
master  work,  Tractatus  De  Origine,  Natura,  Jure  et 
Mutationibns  Monetarum,  was  often  referred  to  be- 
fore that  time.  But  in  every  case  before  Roscher 
saw  Oresme's  work  in  manuscript,  the  examiners  of 
Oresme's  learned  and  lucid  treatise  failed  to  grasp 
its  real  importance.  When,  however,  it  came  under 
the  eye  of  Roscher,  a  trained  economist,  he  saw  at 
once  the  profound  significance  of  the  work.  Under 
the  title  of  "A  Great  French  Economist  of  the 
Fourteenth  Century,"  Roscher  called  the  attention 
of  the  world  to  Oresme's  treatise  on  money.  Two 
years  later  the  French  naturalized  Pole,  Louis 
Wolowski,  also  signalized  to  his  adopted  country 
the  work  of  the  fourteenth  century  economist.2 

Nicole  Oresme,  who  may  be  looked  upon  as  the 
first  scholar,  so  far  as  we  now  know,  to  expound 
comprehensively  money  as  the  mechanism  of  ex- 
change, was  by  birth  a  Norman.  He  studied  at 
the  University  of  Paris,  where  he  was  classed  in 
the  Norman  nation.  At  the  University,  Oresme 
was  reputed  to  be  the  most  able  and  learned  in  his 
knowledge  of  the  sciences  and  the  fine  arts.  He 
translated  at  the  request  of  Charles  the  Fifth  the 
Ethics,  Politics,  and  other  works  of  Aristotle.     He 

2  Traictie  de  la  premiere  invention  des  Monnoies  de  Nicole  Oresme 
textes  francais  et  latin  d'apres  les  manuscrits  de  la  Bibliotheque 
Imp^riale  et  Traite"  de  la  Monnoie  de  Copernic,  texte  latin  et  traduc- 
tion francaise  publics  et  annot^s  par  M.  L.  Wolowski,  membre  de 
l'lnstitut.      Paris,  Guillaumin  et  Cie.,  1864. 


J>*-*->  I" 


ORESME,  COPERNICUS,  AND  GRESHAM.       7 

delivered  at  Avignon  on  December  the  24th,  1363, 
before  Pope  Urban  the  Fifth  and  the  members  of  the 
sacred  college  a  sermon  in  which  he  censured  the 
high  clergy  of  France.  Charles  also  commissioned 
him  to  translate  the  Bible,  in  order  that  this  ver- 
nacular version  might  be  opposed  to  that  of  the 
Waldensians. 

When  Charles  the  Fifth  succeeded  to  the  throne 
of  his  ancestors,  the  French,  crushed  by  what  was 
for  those  times  an  enormous  debt,  were  groaning 
under  the  weight  of  the  accumulated  mismanage- 
ment of  previous  rulers,  and  the  " royaume  des  lys" 
had  shrunk  to  small  proportions  before  the  English 
invasion,  and  was  fast  disappearing  in  misery  and 
anarchy.  Owing  to  the  capture  of  Charles's  father, 
King  John,  by  the  English,  Charles  was  called 
upon  to  act  as  regent.  During  those  years  he 
learnt  much  which  later  as  king  he  put  to  valuable 
practical  use.  Reigning  from  1364  to  1380  under 
the  title  of  Charles  the  Fifth,  he  was,  for  his  able 
management  of  the  affairs  of  his  kingdom,  justly 
surnamed  the  Wise.  This  honorary  title,  Charles 
the  Fifth,  who  was  a  capable  and  sagacious  man, 
was  entitled  for  in  great  measure  to  the  fact  that 
he  surrounded  himself  and  relied  upon  the  services 
of  men  of  first  rate  ability  who  had  strengthened 
their  natural  capacities  by  hard  work,  such  gen- 
erals as  the  Breton,  Bertrand  du  Guesclin,  such 
scholars  as  the   Norman,   Nicole   Oresme.     It  was 


8  THE   LAW   OP 

Charles  the  Wise,  too,  who,  in  beginning  the  first 
collection  of  manuscripts  in  the  Louvre,  that  after- 
wards became  the  Bibliotheque  Royale,  then  the 
Bibliotheque  Imperiale,  and  to-day  is  known  as  the 
Bibliotheque  Nationale,  was  the  founder  of  what 
is  to-day  the  largest  depository  of  learning  in  the 
world. 

The  chief  cause  of  the  unhappy  state  in  which 
the  French  people  found  themselves  when  Due 
Charles  became  king  in  1364  was  in  large  measure 
due  to  the  tampering  by  their  rulers  with  the 
weight  of  the  value  of  the  coins  of  the  realm. 
Many  of  the  French  kings  had  thought  to  raise 
revenue  by  forcing  their  people  to  accept  a  de- 
based coinage.  Of  these  royal  false  coiners,  Dante 
flays  Philip  the  Fair  (1285-1314)  in  the  Paradiso 
in  these  words: 

"La  si  vedra  il  duol  che  sopra  Senna 
Induce,  falseggiando  la  moneta."3 

In  addition  to  debasing  the  coinage,  the  French 
Sovereigns  again  and  again  changed  the  mint 
price  of  gold  and  silver.  In  the  reign  of  King 
John  the  Second,  the  value  of  the  livre  tournois 
was  changed  between  1351  and  1360  no  less  than 
seventy-one  times.4  And  what  made  the  re- 
sulting confusion  from  this  unjustified  and  foolish 

3  "There  shall  be  seen  the  woe  that  he  shall  pour 

Along  the  Seine  by  debasing  the  coinage." 

4  Wolowski. 


ORESME,  COPERNICUS,  AND  GRESHAM.       9 

meddling  with  the  measure  of  commerce  still 
worse,  was  that  sometimes  the  value  of  the  livre 
tournois  was  raised  and  sometimes  it  was  lowered. 
As  a  result,  far  from  filling  the  coffers  of  the  king 
this  policy  prostrated  commerce,  and  the  wealth 
in  the  realm  of  France  shrank.  When  Charles 
the  Fifth,  upon  his  father's  death,  ascended  the 
throne,  he  called  upon  Nicole  Oresme,  in  order 
that  he  might  reform  the  coinage  of  France,  to 
shed  light  upon  the  confused  currency  of  the  king- 
dom. And  thus  it  was  that  Oresme  prepared 
his  most  important  work,  already  referred  to, 
the  first  comprehensive  treatise  upon  money,  en- 
titled Tractatus  De  Origine,  Natura,  Jure  et  Muta- 
tionibus  Monetarum. 

Of  this  work  many  manuscript  copies  of  the 
Latin  original  were  made,  and  also  of  a  French 
translation  by  the  author  himself  under  the  title, 
Traictie  de  la  premiere  invention  des  monnoies. 
This  translation  was  placed  as  early  as  1373  at 
least  in  the  library  collected  by  the  direction  of 
King  Charles  in  the  Louvre. 

Oresme,  in  stating  the  various  workings  of 
money  as  the  mechanism  of  exchange,  explained 
in  precious  words  to  his  sovereign  that,  when- 
ever the  public  currency  was  altered  or  tampered 
with  in  such  a  way  as  to  bring  into  circulation 
two  moneys,  bearing  the  same  designation  but 
in  reality  having  two  different  values,  the  money 


10  THE    LAW    OF 

of  lower  value  inevitably  drove  the  money  of 
higher  value  out  of  circulation.  For  the  mer- 
chants found  it  to  their  advantage  either  to  melt 
down  the  pieces  of  money  that  contained  the 
higher  amount  of  metal  and  to  sell  the  bullion 
by  weight  or  else  to  export  the  high  weight  coins 
to  other  lands.  Thus  Oresme  says:  "The  rate 
of  exchange  and  the  price  of  the  moneys  must 
be  for  the  kingdom  as  a  law  and  a  firm  ordinance 
which  in  no  way  must  alter  or  change."  And 
further  in  speaking  of  the  ratio  of  exchange  be- 
tween gold  and  silver,  Oresme_jpoints  out  that 
the  value  or  proportion  in  which  those  metals 
are  exchanged  in  their  natural  state,  is  the  rate 
of  exchange  that  must  be  maintained  between 
gold  andT  silvexlcurrency.  For  if  a  given  amount 
of  gold  is  worth  twenty  times  as  much  silver,  then 
a  livre  of  gold  would  be  worth  twenty  livres  of 
silver,  a  mark  of  gold  twenty  marks  of  silver.  "But 
always  this  proportion,"  he  says,  "must  follow 
the  natural  habit  or  rate  of  gold  to  silver,  in  value." 
The  mutations  of  the  currency  are  of  great  peril 
to  the  national  welfare  "for  the  injury  which 
comes  by  it,"  he  says,  "is  not  so  soon  felt  nor 
seen  by  the  people,  as  it  would  be  by  another 
tax,  and  nevertheless  no  such  nor  similar  can  be 
more  grievous  or  greater;  and,  in  addition,  gold 
and  silver,  by  such  mutations  and  changes,  shrink 
and   diminish   in   a  kingdom,   and   in  spite  of  all 


ORESME,  COPERNICUS,  AND  GRESHAM.     11 

vigilance  and  prohibition  that  may  be  taken, 
they  go  abroad  where  they  are  accorded  a  higher 
value  for,  by  adventure,  men  carry  more  volun- 
tarily their  moneys  to  the  places  where  they  know 
these  have  a  greater  value." 

The  luminous  treatise  of  Oresme  on  money 
opened  the  eyes  of  King  Charles  to  the  disastrous 
results  to  a  country  whose  government  attempted 
to  alter  the  basic  value  of  its  currency.  As  regent 
of  France  during  the  captivity  by  the  English 
of  his  father,  King  John  the  Second,  who  was  cap- 
tured at  Poitiers  in  1356,  Charles  had  not  escaped 
the  prevailing  custom  among  rulers  of  that  epoch 
to  fill  the  royal  purse  by  debasing  the  coins  of 
the  realm.  In  the  previous  century  the  great 
ordinance  of  1255,  which  the  States  Generals  of 
France,  assembled  at  Paris,  obtained  from  the 
king,  Louis  the  Ninth,  promised  sound  and  stable 
money  for  the  whole  Kingdom  of  France,  so  that 
the  mark  of  silver  should  never  produce  more 
than  six  livre  tournois.  This  royal  promise  was 
broken  again  and  again  by  the  French  sovereigns, 
and  Due  Charles,  as  regent  for  his  captive  father, 
said  the  value  of  the  mark  should  be  worth  twelve 
livre  tournois.  This  cutting  in  half  of  the  measure 
of  value  was  the  signal  for  the  great  rising  at  Paris 
in  1357  under  Etienne  Marcel,  the  Prevost  of  the 
Paris  merchants,  and  it  was  with  difficulty  that 
the  regent   reasserted   the   royal   authority   in   the 


12  THE    LAW    OF 

city.6  The  distracted  and  poverty  stricken  state 
of  the  people  and  the  low  ebb  of  the  kingly 
power,  reenforced  by  his  practical  experiences 
as  regent,  caused  Charles  the  Wise,  though  of  a 
physique  so  frail  that  he  could  not  march  at  the 
head  of  his  army  in  those  years  of  strife  and  peril, 
yet  endowed  with  a  superior  mind  and  seeking 
the  advice  of  sage  advisers,  to  set  himself  to  re- 
organize the  finances  of  France.  The  luminous 
thoughts  expressed  in  the  treatise  of  Oresme  he 
made  his  own,  and  during  his  reign  the  weight 
of  the  gold  currency  remained  a  fixed  and  un- 
changed quantity,  and  that  of  silver  was  but  very 
triflingly  altered.  The  resulting  stability  in  the 
value  of  money,  the  measure  of  commercial  ex- 
change, re-established  the  regularity  of  commercial 
transactions,  and  furnished  an  important  element 
to  public  prosperity.  The  resources  of  the  realm 
augmented  and  with  them  the  power  of  King 
Charles  grew.  To  honor  the  scholar  who  had 
made  plain  the  confusion  that  resulted  from  tam- 
pering with  the  standard  of  value,  the  money  of 
the  realm,  King  Charles  had  Oresme  elected  in 
1377  Count  Bishop  of  Lisieux  in  Normandy.  And 
it  was  there,  two  years  after  the  king's  death  in 
1380,  that  the  great  economist  died  on  July  11th, 
1382,  regretted  especially  by  the  scholars  of  his 
day. 

6  Wolowski. 


r 

ORESME,  COPERNICUS,  AND  GRESHAM.      13 

The  economic  truths  that  Oresme  so  well  stated 
in  his  treatise  on  money  did  not  become  widely 
known,  for  his  work  was  written  for  his  king's 
information,  and  Gutenberg  had  not  yet  made  it 
possible  through  printing  to  give  them  a  wide  cir- 
culation. The  truths  that  Oresme  taught  and  upon 
which  Charles  the  Wise  acted,  to  the  profit  of  his 
kingdom  and  therefore  of  himself,  became  in  great 
measure  forgotten.  A  century  and  a  half  after 
Oresme 's  death  they  were  rediscovered  and  restated 
a  second  time.  In  the  year  1526,  in  a  Latin  treatise 
entitled  Monete  Cudende  Ratio,  written  at  the 
request  of  Sigismund  the  First,  King  of  Poland, 
and  his  Chancellor,  Szydlowiecki,  Nicolas  Copernicus 
of  Thorn  in  Prussia,  who  had  elucidated  for  man- 
kind some  of  the  celestial  harmonies,  gave  to  the 
world  an  exposition  of  some  of  the  economic  truths. 
Independently  of  the  work  of  Oresme,  of  which 
the  Prusso- Polish  scholar  knew  nothing,  Copernicus 
made  clear  for  his  sovereign  that  two  moneys  of 
unequal  value  could  not  be  kept  in  circulation  at 
the  same  time.  "Gold  or  silver,"  he  writes,  "  marked 
with  an  imprint,  constitutes  the  money  which 
serves  to  determine  the  price  of  things  that  are 
bought  and  sold,  according  to  the  laws  established 
by  the  State  or  the  Prince.  Money  is  therefore  in 
some  sort  a  common  measure  of  estimating  values; 
but  this  measure  must  always  be  fixed  and  must 
conform  to  the  established  rule.     Otherwise,  there 


14  THE    LAW    OF 

would  be,  necessarily,  disorder  in  the  State:  buyers 
and  sellers  would  at  all  times  be  misled,  as  if  the 
ell,  the  bushel  or  the  weights  did  not  maintain 
constant  quan#ty. 

3gC  5JC  5|»  3|»  *p  *f*  1» 

"The  establishment  of  money  has  necessity  for 
cause.  Though  in  weighing  only  gold  and  silver 
it  would  have  been  possible  to  practice  exchanges, 
those  metals,  from  the  unanimous  consent  of  men, 
being  considered  everywhere  as  precious  things, 
nevertheless  there  would  be  numerous  inconveni- 
ences to  have  to  carry  always  weights  along,  and, 
all  the  world  not  being  apt  to  recognize  at  the  first 
glance  the  purity  of  gold  and  silver,  it  is  agreed 
everywhere  to  have  money  marked  by  government 
with  a  stamp  designed  to  show  how  much  each 
coin  contains  of  gold  and  silver  and  to  serve  as  a 
guaranty  to  public  faith." 

Then  he  explains  how  the  value  of  metal  pieces 
is  changed  and  depreciated. 

"The  value  of  money  is  depreciated  by  various 
causes,  either  by  the  change  of  the  name,  while  the 
same  weight  of  metal  contains  a  mixture  of  copper 
which  exceeds  the  measure  desired;  or  because 
the  weight  is  wanting,  although  the  mixture  has 
been  accomplished  in  the  right  proportion;  or, 
what  is  the  worst,  because  the  two  vices  meet 
together  at  the  same  time.  The  value  of  money 
diminishes  of  itself  by  reason  of  a  long  service  that 


ORESME,  COPERNICUS,  AND  GRESHAM.      15 

uses  the  metal  and  diminisRs  its  quantity  and 
this  reason  suffices  to  cause  to  be  placed  in  circula- 
tion a  new  money.  This  necessity  .is  recognized 
by  an  infallible  sign,  when  the  money  weighs  notably 
less  than  the  money  intended  to  be  acquired.  It  is 
understood  that  there  results  a  deterioration  of  the 
money." 

At  the  time  Copernicus  prepared  his  treatise  on 
the  money  of  the  realm  for  his  sovereign  liege, 
King  Sigismund,  the  Polish  Kingdom  included 
Thorn,  Danzig,  and  a  large  part  of  Prussia.  But 
a  portion  of  Prussia,  including  Konigsberg,  had 
been  erected  by  the  treaty  of  Cracow,  concluded 
in  1525  between  Sigismund,  King  of  Poland,  and 
Albert,  Margraf  of  Brandenburg,  into  a  hereditary 
fief  for  the  benefit  of  the  latter  and  his  male 
descendants,  which  the  margraf  was  to  hold  of 
King  Sigismund.  As  by  this  feudal  tenure  by 
Margraf  Albert  of  part  of  Prussia,  subject  to  the 
overlordship  of  the  Polish  king,  the  two  countries 
were  in  a  sense  one,  Copernicus,  in  his  treatise  on 
the  money  of  the  realm,  expounded  to  his  king 
what  measures  were  necessary  in  order  to  restore 
stability  to  the  much  depreciated  Prussian  money 
and  then  maintain  the  value  of  the  new  money  on 
a  parity  so  that  it  could  circulate  both  in  Poland 
and  Prussia.  After  pointing  out  how  useless  it  was 
to  attempt  to  introduce  into  circulation  by  the  side 
of  a  depreciated  currency  one  of  greater  value,  he 


16  THE    LAW    OF 

then  explained  how  the  introduction  of  a  cheaper 
measure  of  value  by  the  side  of  a  higher  one  would 
drive  the  former  from  circulation.  "If  it  does  not 
do  to  introduce  a  new  and  good  money,  while  the 
old  is  bad  and  continues  to  circulate,  a  much 
greater  error  is  committed  by  introducing  along- 
side of  an  old  currency,  a  new  currency  of  less 
value;  this  latter  does  not  merely  depreciate  the 
old,  it  drives  it  away,  so  to  speak,  by  main  force." 

Then  in  answer  to  the  argument  that  a  depre- 
ciated currency  helps  the  poor,  he  says:  "We  see 
nourish  the  countries  that  possess  a  good  currency, 
while  those  that  only  have  a  depreciated  one,  fall 
into  decadence  and  decline     *     *     *     . 

"It  is  incontestable  that  the  countries  that  make 
use  of  good  currency  shine  in  all  the  arts,  have 
better  workmen,  and  have  of  everything  in  abund- 
ance. On  the  contrary,  in  the  States  which  make 
use  of  a  degraded  money,  reigns  cowardice,  lazi- 
\  ness  and  indolence."  In  order  to  remedy  the  dis- 
tress to  which  Prussia  had  been  brought  by  the 
falsification  and  debasement  of  the  currency,  and 
to  draw  Prussia  and  Poland  closer  together  by 
developing  their  commercial  relations,  it  was  neces- 
sary to  coin  two  moneys  of  equal  intrinsic  value, 
so  that  they  would  circulate  concurrently  in  the  two 
lands.  One  should  bear  on  one  side  the  royal  arms 
of  Poland  and  on  the  other  those  of  the  Prussian 
land.     The   other  money  should  likewise  have  on 


ORESME,  COPERNICUS,  AND  GRESHAM.      17 

one  side  the  royal  arms  of  Poland,  but  on  the 
other  the  imprint  of  the  prince,  that  is  the  effigy 
of  the  King.  "  For  the  first  condition  to  main- 
tain, is  that  one  and  the  other  currency  remain 
under  the  royal  authority,  and  that  they  be  cur- 
rent and  accepted  in  the  whole  kingdom  by  vir- 
tue of  the  prescription  of  His  Majesty ;  which 
would  be  not  of  a  mediocre  importance  for  the 
conciliation  of  public  opinion  and  for  reciprocal 
transactions. 

"  It  would  be  necessary  that  these  two  currencies 
should  be  of  the  same  degree  of  fineness,  having  a 
similar  real  value  and  a  similar  nominal  value,  so 
that,  by  vigilant  care,  the  State  succeeds  to  main- 
tain perpetually  the  regulation  which  it  is  now 
question  to  establish;  it  does  not  belong  to  princes 
to  obtain  any  profit  from  the  money  that  they  shall 
coin ;  they  shall  add  only  so  much  alloy  as  may  be 
necessary  for  the  difference  between  the  real  value 
and  the  nominal  value  to  cover  the  cost  of  minting, 
which  will  avoid  the  principal  attraction  to  remelt 

it. 

t  .$'  $  #.  %  .       .^  .         .| 

"  It  would  be  necessary,  at  the  time  of  the  emis- 
sion of  the  new  money,  to  demonetise  the  old  and 
forbid  entirely  its  use,  allowing  it  to  be  exchanged 
at  the  mints,  in  the  just  proposition  of  the  intrinsic 
value.  Otherwise  it  would  be  labor  lost  to  wish 
to   re-establish   good   money;     the   confusion   that 


18  THE    LAW   OF 

would  ensue  would  be  perhaps  even  worse  than  the 
actual  state  of  affairs.  The  old  money  would  crush 
all  the  advantages  of  the  new." 

Then  Copernicus  explained  that  gold  and  silver 
were  the  base  upon  which  rested  the  value  of 
money;  and  went  on  to  show  that  in  order  to 
maintain  them  both  in  circulation  the  ratio  between 
them  must  agree  with  the  commercial  ratio  that 
existed  between  them.  "It  remains,"  he  went  on, 
"for  us  to  expound  the  manner  of  the  mutual 
exchange  of  gold  and  silver.  In  order  to  pass  from 
the  class  to  the  kind  and  from  the  simple  to  the 
composite,  it  is  necessary  first  to  know  the  price 
of  pure  gold  to  pure  silver.  It  is  known  that  the 
same  exists  between  pure  gold  and  silver,  as 
between  gold  and  silver  minted  under  the  same 
stamp;  as  also  that  the  same  ratio  applies  to  gold 
coins  and  gold  bars  as  to  silver  coins  and  silver  bars, 
provided  that  they  have  the  same  proportion  of 
alloy  and  that  they  represent  the  same  weight." 

f        As   Oresme   and   Copernicus   explained   to   their 
royal   Masters  that  by  either  debasing  or  raising 

V    the  coins  of  the  realm  disaster  and  confusion  would 
\follow,  so  also,  at  the  beginning  of  Queen   Eliza- 
beth's  reign,    one   of   her   merchants,    Sir   Thomas 
Gresham,    pointed   out   to   his   royal   Mistress   this 
inflexible  unwritten  law  of  money. 

Of  a  Norfolk  family,  the  son  of  Sir  Richard 
Gresham,    who   was   Lord    Mayor   of   London,    Sir 


ORESME,    COPERNICUS,    AND    GRESHAM.  19 

Thomas  Gresham  was  born  in  that  city  probably 
in  1519,  and  died  there  on  November  21,  1579. 
He  was  educated  at  Cambridge  University,  was  a 
Protestant,  and  all  his  life  took  an  active  part  in 
commercial  affairs,  often  representing  in  the  Low 
Countries  the  commercial  interests  of  England.  In 
1566  and  1567  he  built  the  Royal  Exchange  in 
London.  He  founded  also  Gresham  College,  and 
provided  that  the  science  of  astronomy  should  be 
taught  there. 

In  a  letter  to  Queen  Elizabeth,  which  is  headed, 
"information  of  Sir  Thomas  Gresham,  Mercer, 
touching  the  fall  of  the  exchange,  MDLVIII," 
and  which  begins,  "To  the  Quenes  most  excellant 
maiestye,"  Gresham  says: 

"  Ytt  may  pleasse  your  majesty  to  understande, 
thatt  the  firste  occasion  off  the  fall  of  the  ex- 
chainge  did  growe  by  the  Kinges  majesty,  your 
latte  ffather,  in  abasinge  his  quoyne  ffrome  vi 
ounces  fine  too  iii  ounces  fine.  Wheruppon  the 
exchainge  fell  ffrome  xxvis.  viiid.  to  xiiis.  ivd. 
which  was  the  occasion  thatt  all  your  ffine  goold 
was  convayd  ought  of  this  your  realme." 

The  works  on  money  of  these  three  men,  who, 
independently  of  one  another,  expounded  to  their 
respective  sovereigns  the  evils  resulting  to  the 
State  from  any  attempt  to  debase  the  coinage, 
did  not  become  generally  known  to  their  con- 
temporaries.    However,    their    discoveries    through 


20  THE    LAW    OF 

the  influence  of  their  royal  rulers  gradually  made 
some  impress  upon  mankind,  and  by  the  end  of 
the  seventeenth  century  it  had  become  common 
knowledge  among  the  intellectuals  of  that  day. 
In  a  pamphlet  published  in  London  in  1696,  the 
Law  of  Oresme,  Copernicus  and  Gresham,  though 
doubtless  the  writer  did  not  know  directly  of 
their  works,  is  thus  stated: 

*  "  When  two  sorts  of  Coin  are  current  in  the 
same  nation  of  like  value  by  denomination  but 
not  intrinsically  [that  is  in  commercial  value], 
that  which  has  the  least  value  will  be  current, 
and  the  other  as  much,as  possible  will  be  hoarded." 
"Sx^In  1858  the  British  economist,  Henry  Dunning 
MacLeod,  called  attention  to  Gresham's  state- 
ment of  this  unwritten  law  of  coinage,  and  sug- 
gested that  it  should  be  known  as  Gresham's  Law. 
At  the  time  he  did  not  know  of  the  more  elaborate 
treatises  of  Oresme  and  Copernicus  on  coinage. 
But  when  the  works  on  money  of  those  two  master 
economists  were  revealed  through  the  effort's  of 
Roscher  and  Wolowski  in  1862  and  1864  to  the 
world  at  large,  MacLeod,  like  a  true  scholar  who 
wishes  to  give  credit  to  whom  honor  is  due,  sug- 
gested that  this  economic  law,  a  law  more  power- 
ful than  the  statutes  enacted  by  the  strongest 
Parliamentary  bodies,  should  be  known  after  all 
three  of  its  discoverers  as  the  Law  of  Oresme, 
Copernicus,  and  Gresham. 


ORESME,  COPERNICUS,  AND  GRESHAM.      21 

During  the  centuries,  many  nations  in  various 
parts  of  the  world  have  had  abundant  experience 
to  learn  the  futility  of  attempting  to  maintain 
in  circulation  as  currency  two  moneys  at  a  ratio 
different  from  the  market  or  commercial  ratio 
existing  at  that  time  between  those  two  kinds 
of  money.  In  every  case  where  such  an  effort 
has  been  made,  the  money  that  is  underrated 
gradually  drives  that  which  is  overrated  from 
the  country.  And  this  nation  has  had  several 
experiences  with  this  law.  Without  touching  here 
upon  the  works  of  other  economic  scholars,  such 
as  Petty,  Locke,  Wolowski,  Jevons,  Leon  Say, 
Horton,  Bamberger,  Laughlin,  White  and  others, 
who  have  added  to  our  knowledge  of  the  unwritten 
laws  that  govern  money  as  the  medium  of  ex- 
change, it  can  be  safely  said  that  the  more  the 
economic  experience  of  the  human  race  is  studied, 
the  more  does  it  become  clear  that  any  attempt 
to  tamper  with  the  currency  of  a  Nation  by  in- 
jecting a  debased  money  into  its  measure  of  value 
is  certain  to  end  in  disaster  through  the  working 
of  that  natural  law  of  finance,  the  Law  of  Oresme, 
Copernicus  and  Gresham. 


OF  THE 

UNIVERSITY 

OF 


YD  24UQ 


wm&mtmm^ 


